The New York Times is reporting that three months since passing the stimulus bill only 6% of it has been spent so far. Another way to look at is that only $46 billion has been spent so far.
The intent of the stimulus program was to pump money into the economy quickly, and many members of Congress said at the time of its passage that speed was of the essence. But the huge program has been a challenge to administer for both a new administration and for states and local governments grappling with their own fiscal problems.
I think this criticism was pointed out well before the bill was passed and was cited as one of the reasons why the stimulus wouldn’t provide much stimulus when needed, and it is the reason why up until recently many economists did not favor this kind of policy response to a recession.
Vice President Joseph R. Biden Jr., who writes in a report on the stimulus bill to be released this week that it remains “ahead of schedule in most programs,” said in a telephone interview Tuesday that the bill was helping people grapple with the recession, getting money to the states and into the economy, and laying a foundation for long-term aspirations like high-speed rail.
“We’re 85 days into a two-year program here — we’re trying to get the money out as quickly as we can, but not too quickly, so we don’t end up really screwing up here,” Mr. Biden said. “Because we’re talking about big dollars here, these are big numbers, this is unprecedented. And in 85 days we’ve gotten tens of billions of dollars out the door, and so far — knock on wood — no real big problems, no real big glitches.”
No big glitches other than the fact that the recession will likely be over well before all the money is spent. I think this should be kept in mind the next time President Obama or his supporters talk about inherited budget deficits. Sure, some of the budget deficit is inherited, but Senator Obama voted for some of the spending programs that lead to these deficits. President Obama pushed through a nearly $800 billion dollar stimulus package. A significant part of the current and future deficits are his responsibility.
Nonetheless, to the frustration of some local governments, the federal spigot has been more trickle than flood, and states are facing such fiscal pressure that many are cutting jobs anyway.
This is indeed the case in California. And this isn’t how you use federal spending for counter-cyclical policy. In the post WWII period increases to spending would have to rather sudden and we aren’t seeing this.
Photo by Flickr user Joan Thewlis, used under the Creative Commons license.
